A good credit rating is important to life in the USA: how an immigrant can build it from scratch
Immigrants come to the United States without a credit history in this country, but it is needed for a variety of purposes - from renting a home and hiring a certain job to being checked in hospitals. A good credit score is essential to life in America. How to build and improve it? Tells USA Today.
A good credit rating is one of those important milestones to strive for. This does not mean that you have paid off all loans, but it is a sign that you are doing well. You can qualify for most of the very best credit cards, and you will most likely not be refused a mortgage or loan.
You might want to know how long it takes to build a good credit score. It is different for each, but one can reasonably assume its duration based on the experiences of other consumers. True, you first need to understand what counts as a good credit history.
What is a good credit rating
A good credit rating is a FICO® rating from 670 to 739. FICO is the most widely used credit rating system, using a rating range of 300 to 850.
There is another popular credit rating system called VantageScore. It also uses a rating range of 300 to 850. On this system, a score of 661 to 780 is a good indicator.
If you are going to check your credit rating, do it better with the FICO® Score, as lenders use this rating most often.
On the subject: Unexpected Factors Affecting Your US Credit Rating
How long does it take to get a good credit rating
When you start from scratch, it usually takes one to two years to get a good credit rating. This is provided that you do not make mistakes that will harm your credit history (late payments or the accumulation of a large amount of credit card debt). Anything that negatively affects your credit will slow down your progress.
The reason it takes time is in the very process of creating a credit history. The first step if you are getting a loan for the first time is to open a credit account. To assign you a credit rating, FICO requires you to have a credit account that is at least six months old. VantageScore can give you a score even if the score is “under”.
In both FICO and VantageScore systems, the most important factor in calculating your score is your payment history. Each timely payment increases your credit score. This is the biggest reason you won't have a good credit rating right away. You need to create a strong billing history.
Consumers who open credit accounts use them regularly and always pay them on time. As a result, they achieve a good credit rating within two years.
Restoring a good credit rating
A period of one to two years applies to those who receive a loan for the first time. However, it doesn't necessarily take that long if you are restoring your credit after your rating has dropped.
When the credit rating is restored, the time will depend on why it dropped. If you have withdrawn too much from your card and the loan utilization rate has become too high, then you can fix it in one or two months by paying off the debt. On the other hand, if you've filed for bankruptcy or had multiple late payments, it can take years for your credit rating to recover.
You may be interested in: top New York news, stories of our immigrants and helpful tips about life in the Big Apple - read it all on ForumDaily New York
The path to a good reputation
Setting credit goals is smart. And a good credit score is a common starting point. You can't be sure how quickly you will get there, but if you follow the right financial habits, you will make steady progress.
Fortunately, there is nothing difficult about what needs to be done. Get at least one credit card that you use regularly. Avoid spending too much - try to never use more than 20% of the total loan amount. Most importantly, always pay your bill on time and ideally in full so you don't get charged interest.
That's all you need to do for a good credit rating. After that, make sure you stick to the same habits to keep your score growing.
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